Dominion Resources agrees to buy Questar for $4.4 billion

Combined entity will serve about 2.5 million electric utility customers

By

LisaBeilfuss

Dominion Resources Inc. agreed to buy Questar Corp. for about $4.4 billion in cash, in a move to expand its natural gas operations beyond the mid-Atlantic and into the West.

Richmond, Va.-based Dominion
D, -1.04%
will pay $25 a share for Salt Lake City-based Questar
US:STR
, representing a 23% premium to where Questar’s stock closed on Friday. Dominion said it also would assume Questar’s debt--as of Sept. 30, Questar had roughly $1.31 billion in short and long-term debt on its balance sheet.

Questar is a natural gas distributor that primarily serves customers across Utah. Dominion said the deal would “provide enhanced geographic diversity” to its operations, and said it expects the value of the Questar pipeline system to rise over time as Utah and other Western states seek to comply with the requirements of the U.S. Environmental Protection Agency’s Clean Power Plan and meet state-mandated renewable standards.

The deal comes amid a deep rout in energy prices. The price of natural gas has fallen 7% since the start of the year and is down about 15% over the past 12 months.

The combined company would serve about 2.5 million electric utility customers and 2.3 million gas utility customers in seven states, the companies said. Dominion said the deal, expected to be completed by year-end, would add to earnings upon closing.

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